The fintech market is expected to be worth $698.48 billion in 2030, up from $110.57 billion in 2020. Both new businesses and companies that have been around for a while are keeping up with the speed of change and making sure their processes are up to date. They are also getting enough professional skills and tools.
You will fail if you don’t grow. But you also need to make sure that the flexible answer is still useful. To get an edge over your rivals in 2024, you might think about adopting new financial industry trends.
We looked into the banking business to find out how fintech companies will try to get better at what they do. Everything you need to know about the fintech trends of 2024, the digitalization and transformation of the payment sector, and the role fintech innovation will play in the last few years, is here in this article.
Without further ado, let’s dive into the most prominent trends in financial technology.
Statista projects that 68 million individuals will use open banking services in 2024. Open banking emphasizes the exchange of financial information in a controlled manner. Account holders can consent to the dissemination of their financial data to nontraditional financial institutions. Accessible APIs permit third-party suppliers to access the financial data of clients. Open banking opportunities are utilized by numerous fintech companies that offer budgeting, expense monitoring, financial planning, lending, and other services.
Only 10% of the potential of open banking has been realized, according to McKinsey. This financial technology exhibits promise. Since information interchange promotes scholastic research, software development, and the enhancement of financial services, users are beginning to progressively recognize the advantages of working with open data.
A devoted customer who is satisfied with the dependability and stability of their bank, for instance, may decide not to switch institutions. However, the bank is quite conservative, and many digital services provided by competitors have not been adopted.
Open APIs enable a financial institution to grant insurance companies, retailers, and other businesses access to client accounts. Before providing insurance, a loan, or allowing payment in installments, they must verify the solvency of the customer. Due to open banking, users can now pay for goods and services online quickly and easily, receive a loan quickly, and pay for services with a single scan.
SASSA News reported that Neobanking is being popular in South Africa.
FinTech has aided the expansion of neobanks. Many new FinTech companies are primarily focused on the neobanking idea, as opposed to conventional bank branch structures. Thus, neobanks contain all the features of conventional bank branches. It is a win-win strategy for both businesses and consumers due to the cost savings and convenience of access.
Neobanks are a type of fintech corporation whose purpose is to reduce the expense of banking services. They typically offer fewer service categories than larger institutions, but they focus on improving the content of those categories.
Between 2023 and 2026, the total amount of neobank account holders in the US is projected to grow significantly. It is anticipated that by 2026, there will be 34.7 million neobank account holders, up from an estimated 23.7 million in 2022. At a time when working from home was essential for many businesses, the availability of mobile banking apps with immediate transfers, rapid registration, and IBAN and ACH accounts was an important perk.
RegTech (Regulatory technology)
One must be aware of and follow the rules, norms, and regulations that regulate the activities of financial institutions. Accounting records, tax reports, income reports, and client reports must all be kept up to date by businesses. Technology provides the relevant papers to regulatory organizations in accordance with the schedule. Also, check the data’s correctness and the activity’s legality.
RegTech is a category of technology used to track compliance with regulations. Regulatory technology finds issues that don’t adhere to the regulations and fixes them, so they function as part of the system. Automating repetitive tasks, monitoring data security, and warning customers and bank employees of fraud are all achieved via specialized software.
Millions of dollars are charged as fines for breaking the rules. For instance, the Bank of America Corporation earlier agreed to pay New York State $42 million for giving consumers just a rudimentary explanation of how their share orders were processed.
RegTech facilitates communication between organizations and their regulatory bodies so that data may be transmitted continuously, compliance is tracked (for instance, by conforming to PCI compliance guidelines), and financial crimes are investigated.
Artificial Intelligence and Machine Learning
The market for artificial intelligence in the financial technology sector is anticipated to be worth USD 42.83 billion in 2023 and USD 49.43 billion in 2028.
Financial institutions may keep tabs on their client’s financial status and adapt their services to their specific needs with the help of AI by collecting and analyzing data from their clients’ savings, credit, and investment accounts. Companies can leverage the power of cognitive automation, engagement, data analytics, and insights to improve their smart banking services.
AI allows you to:
- govern customer data;
- provide suggestions on management strategies;
- detect human errors;
- control the quality of service.
Artificial intelligence can also interact with customers directly through chatbots and self-learning programs.
Robo-advisors and personal financial managers use artificial intelligence technologies to help clients spend their money wisely. Such applications are a powerful market breakthrough that generates huge profits.
Based on AI data analysis tools, robo-advisors can:
- analyze huge amounts of information;
- adapt to the changing market faster than human experts;
- select the best investment options for clients to help them achieve their goals.
They are especially popular among new investors who do not have access to classical consultations. This is because alternative investment instruments have made it much easier for investors to get started and have made it possible for almost anyone, even those with small funds, to earn money.
To Sum Up
We have reviewed 5 trends in the fintech industry that have influenced the development of the sector and services. These changes and innovations will become a driving force for businesses. Implementation of modern practices will help to bring a company or business to a higher level, and consumers will be able to get great user experience and satisfaction. Always remember to keep one step ahead of your competitors.